U.S. Markets close in 2 hrs 40 mins

Align Technology Announces Third Quarter 2016 Results

SAN JOSE, CA--(Marketwired - November 07, 2016) -

  • Q3 revenues up 34.2% year-over-year to $278.6 million
  • Q3 results driven by Clear Aligner revenues up 22.9% year-over-year and Scanner revenues up 273.7% year-over-year.
  • Q3 Clear Aligner shipments up 20.5% year-over-year to 177.8 thousand cases, international shipments up 33.8% year-over-year
  • Diluted EPS $0.63, up $0.29 year-over-year

Align Technology, Inc. (ALGN) today reported financial results for the third quarter ended September 30, 2016. Clear Aligner case shipments in the third quarter of 2016 (Q3'16) were 177.8 thousand, a 20.5% increase year-over-year. For Q3'16, revenues were $278.6 million, a 34.2% increase year-over-year, and net profit was $51.4 million, or $0.63 per diluted share, up $0.29 per diluted share compared to the same period in the prior year.

"Q3 was a solid quarter with revenue, margins and EPS above the high end of our guidance. Our results were driven by record Invisalign case volume, up 20.5% year-over-year reflecting growth across all customer channels and geographies, as well as continued demand for iTero scanners," said Joe Hogan, Align Technology President and CEO.

GAAP Summary Financial Comparisons
Third Quarter Fiscal 2016

    Q3'16   Q2'16   Q3'15   Q/Q Change   Y/Y Change
Clear Aligner Shipments   177,755   176,995   147,485   +0.4%   +20.5%
Net Revenues   $278.6M   $269.4M   $207.6M   +3.4%   +34.2%
  Clear Aligner   $243.7M   $243.4M   $198.3M   +0.1%   +22.9%
  Scanner & Services   $34.9M   $25.90M   $9.3M   +34.7%   +273.7%
Net Profit   $51.4M   $50.1M   $27.6M   +2.4%   +86.0%
Diluted EPS   $0.63   $0.62   $0.34   $0.01   $0.29
                     

Note: Changes and percentages are based on actual values and may effect totals due to rounding

As of September 30, 2016, Align had $675.8 million in cash, cash equivalents and marketable securities compared to $678.7 million as of December 31, 2015. During Q3'16, Align concluded our previously announced $50 million accelerated stock repurchase (ASR) with final delivery of 143,310 shares and purchased an additional 88,000 shares amounting to $8.2 million in open market repurchases. These repurchases were collectively part of a three-year, $300 million stock repurchase program announced on April 23, 2014 ("the Align 2014 Repurchase Plan") of which the third $100 million was authorized to be purchased through April 2017. In addition to the April 2014 Repurchase Plan, Align also announced on April 28, 2016 a new plan to repurchase up to an additional $300.0 million of the Company's stock. There remains approximately $341.8 million available for repurchases under the two existing stock repurchase authorizations.

Q4 2016 Business Outlook

For the fourth quarter of 2016 (Q4'16), Align provides the following guidance:

  • Clear Aligner case shipments in the range of 182.5 thousand to 184.5 thousand, up approximately 13.8% to 15.0% over the same period a year ago.
  • Net revenues in the range of $289.2 million to $293.9 million.
  • Diluted EPS in the range of $0.64 to $0.67.

Align Web Cast and Conference Call

Align will host a conference call today, November 7, 2016 at 4:30 p.m. ET, 1:30 p.m. PT, to review its third quarter 2016 results, discuss future operating trends and the business outlook. The conference call will also be web cast live via the Internet. To access the webcast, go to the "Events & Presentations" section under Company Information on Align's Investor Relations web site at http://investor.aligntech.com. To access the conference call, please dial 201-689-8261. An archived audio web cast will be available beginning approximately one hour after the call's conclusion and will remain available for approximately 12 months. Additionally, a telephonic replay of the call can be accessed by dialing 877-660-6853 with conference number 13646649 followed by #. For international callers, please dial 201-612-7415 and use the same conference number referenced above. The telephonic replay will be available through 5:30 p.m. ET on November 21, 2016.

About Align Technology, Inc.

Align Technology is the leader in modern Clear Aligner orthodontics that designs, manufactures and markets the Invisalign® system, which provides dental professionals with a range of treatment options for adults and teenagers. Align also offers the iTero 3D digital scanning system and services for orthodontic and restorative dentistry. Align was founded in March 1997 and received FDA clearance to market the Invisalign system in 1998. Visit www.aligntech.com for more information.

For additional information about the Invisalign system or to find an Invisalign provider in your area, please visit www.invisalign.com. For additional information about the iTero 3D digital scanning system, please visit www.itero.com.

Forward-Looking Statement

This news release, including the tables below, contains forward-looking statements, including statements regarding certain business metrics for the fourth quarter of 2016, including, but not limited to, anticipated net revenues, gross margin, operating expenses, operating profit, diluted earnings per share, and case shipments. Forward-looking statements contained in this news release and the tables below relating to expectations about future events or results are based upon information available to Align as of the date hereof. Readers are cautioned that these forward-looking statements are only predictions and are subject to risks, uncertainties and assumptions that are difficult to predict. As a result, actual results may differ materially and adversely from those expressed in any forward-looking statement. Factors that might cause such a difference include, but are not limited to, difficulties predicting customer and consumer purchasing behavior, the willingness and ability of our customers to maintain and/or increase product utilization in sufficient numbers, the possibility that the development and release of new products does not proceed in accordance with the anticipated timeline, the possibility that the market for the sale of these new products may not develop as expected, or that the expected benefits of new or existing business relationships will not be achieved as anticipated, the risks relating to Align's ability to sustain or increase profitability or revenue growth in future periods while controlling expenses, growth related risks, including capacity constraints and pressure on our internal systems and personnel, our ability to successfully achieve the anticipated benefits from the scanner and services business, continued customer demand for our existing and new products, changes in consumer spending habits as a result of, among other things, prevailing economic conditions, levels of employment, salaries and wages and consumer confidence, the timing of case submissions from our doctors within a quarter, acceptance of our products by consumers and dental professionals, foreign operational, political and other risks relating to Align's international manufacturing operations, Align's ability to protect its intellectual property rights, continued compliance with regulatory requirements, competition from existing and new competitors, Align's ability to develop and successfully introduce new products and product enhancements and the loss of key personnel. These and other risks are detailed from time to time in Align's periodic reports filed with the Securities and Exchange Commission, including, but not limited to, its Annual Report on Form 10-K for the year ended December 31, 2015, which was filed with the Securities and Exchange Commission (SEC) on February 25, 2016, and its Quarterly Report on Form 10-Q for the quarter ended June 30, 2016, which was filed with the SEC on August 4, 2016. Align undertakes no obligation to revise or update publicly any forward-looking statements for any reason.

         
ALIGN TECHNOLOGY, INC.        
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS    
(in thousands, except per share data)        
                 
    Three Months Ended   Nine Months Ended
    September 30, 
  September 30, 
   
2016
  2015  
2016
  2015
                 
Net revenues   $ 278,589   $ 207,636   $ 786,671   $ 615,210
                         
Cost of net revenues     69,387     50,060     191,626     147,910
                         
Gross profit     209,202     157,576     595,045     467,300
                         
Operating expenses:                        
  Selling, general and adminstrative     126,708     101,751     360,385     290,657
  Research and development     20,415     17,779     54,111     47,348
Total operating expenses     147,123     119,530     414,496     338,005
                         
Income fom operations     62,079     38,046     180,549     129,295
                         
Interest and other income (expense), net     1,463     (1,568)     1,161     (2,846)
                         
Net income before provision for income taxes and equity in losses of investee     63,542     36,478     181,710     126,449
                         
Provision for income taxes     11,698     8,862     39,172     31,306
Equity in losses of investee, net of tax     477     -     477     -
                         
Net income   $ 51,367   $ 27,616   $ 142,061   $ 95,143
                         
Net income per share                        
  Basic   $ 0.64   $ 0.35   $ 1.78   $ 1.19
  Diluted   $ 0.63   $ 0.34   $ 1.74   $ 1.17
                         
Shares used in computing net income per share                        
  Basic     79,977     79,808     79,920     80,173
  Diluted     81,466     81,092     81,523     81,576
                           
         
ALIGN TECHNOLOGY, INC.        
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS    
(in thousands)        
         
    September 30,
2016
  December 31,
2015
ASSETS        
         
Current assets:            
  Cash and cash equivalents   $ 419,948   $ 167,714
  Marketable securities, short-term     193,018     359,581
  Accounts receivable, net     244,992     158,550
  Inventories     26,341     19,465
  Prepaid expenses and other current assets     27,469     26,700
    Total current assets     911,768     732,010
             
Marketable securities, long-term     62,820     151,370
Property, plant and equipment, net     172,658     136,473
Equity method investments     46,268     -
Goodwill and intangible assets, net     82,987     79,162
Deferred tax assets     68,918     51,416
Other assets     13,474     8,202
             
    Total assets   $ 1,358,893   $ 1,158,633
             
      LIABILITIES AND STOCKHOLDERS' EQUITY            
             
Current liabilities:            
  Accounts payable   $ 33,104   $ 34,354
  Accrued liabilities     132,538     107,765
  Deferred revenues     177,409     129,553
    Total current liabilities     343,051     271,672
             
Income tax payable     42,539     37,512
Other long term liabilities     993     1,523
    Total liabilities     386,583     310,707
             
Total stockholders' equity     972,310     847,926
             
    Total liabilities and stockholders' equity   $ 1,358,893   $ 1,158,633
                 
ALIGN TECHNOLOGY, INC.
Q3 2016 FINANCIAL AND BUSINESS METRICS
(in thousands except average selling price, utilization and doctors trained)
                               
    Q1   Q2   Q3   Q4 Fiscal   Q1   Q2   Q3
    2015   2015   2015   2015 2015   2016   2016   2016
Invisalign Clear Aligner Net Revenues by Geography:                              
  North America   $ 118,844   $ 126,137   $ 124,085   $ 129,663 $ 498,729   $ 135,699   $ 143,909   $ 143,800
  International     55,920     61,896     61,265     70,980   250,061     69,850     83,703     84,304
  Non-case*     12,265     12,784     12,942     13,405   51,396     14,149     15,824     15,564
    Total Clear Aligner Net Revenues   $ 187,029   $ 200,817   $ 198,292   $ 214,048 $ 800,186   $ 219,698   $ 243,436   $ 243,668
      YoY % growth     11.2%     11.7%     11.3%     14.8%   12.3%     17.5%     21.2%     22.9%
      QoQ % growth     0.3%     7.4%     -1.3%     7.9%         2.6%     10.8%     0.1%
  *includes Invisalign training, ancillary products, and retainers                                              
                                               
Average Invisalign Selling Price (ASP):                                              
  Worldwide ASP   $ 1,335   $ 1,300   $ 1,255   $ 1,250 $ 1,285   $ 1,255   $ 1,285   $ 1,285
  International ASP   $ 1,410   $ 1,380   $ 1,325   $ 1,315 $ 1,355   $ 1,315   $ 1,345   $ 1,365
                                               
                                               
Invisalign Clear Aligner Cases Shipped by Geography:                                              
  North America     91,110     99,630     101,260     106,390   398,390     110,500     114,855     115,900
  International     39,670     44,940     46,225     54,010   184,845     53,195     62,140     61,855
    Total Cases Shipped     130,780     144,570     147,485     160,400   583,235     163,695     176,995     177,755
      YoY % growth     16.6%     28.9%     23.6%     26.4%   22.0%     25.2%     22.4%     20.5%
      QoQ % growth     3.1%     10.5%     2.0%     8.8%         2.1%     8.1%     0.4%
                                               
Number of Invisalign Doctors Cases Shipped To:                                              
  North America     20,165     21,335     21,160     21,835   31,710     22,355     22,575     22,570
  International     9,050     9,790     10,150     10,865   16,460     11,280     12,485     12,720
    Total Doctors Cases Shipped To     29,215     31,125     31,310     32,700   48,170     33,635     35,060     35,290
                                               
Invisalign Doctor Utilization Rates*:                                              
  North America     4.5     4.7     4.8     4.9   12.6     4.9     5.1     5.1
    North American Orthodontists     9.0     9.5     9.9     9.9   31.8     10.4     10.7     11.1
    North American GP Dentists     2.9     3.0     2.9     3.1   7.4     3.0     3.1     3.0
  International     4.4     4.6     4.6     5.0   11.2     4.7     5.0     4.9
    Total Utilization Rates     4.5     4.6     4.7     4.9   12.1     4.9     5.1     5.0
  * # of cases shipped/# of doctors to whom cases were shipped                                              
                                               
Number of Invisalign Doctors Trained:                                              
  North America     870     1,120     1,060     1,270   4,320     875     1,125     1,300
  International     1,540     1,335     1,200     1,400   5,475     1,605     1,760     1,315
    Total Doctors Trained Worldwide     2,410     2,455     2,260     2,670   9,795     2,480     2,885     2,615
    Total to Date Worldwide     96,405     98,860     101,120     103,790   103,790     106,270     109,155     111,770
                                               
Total Net Revenues:                                              
  Clear Aligner Net Revenues   $ 187,029   $ 200,817   $ 198,292   $ 214,048 $ 800,186   $ 219,698   $ 243,436   $ 243,668
  Scanner & Services Net Revenues     11,057     8,671     9,344     16,228   45,300     19,022     25,926     34,921
    Total Worldwide Net Revenues   $ 198,086   $ 209,488   $ 207,636   $ 230,276 $ 845,486   $ 238,720   $ 269,362   $ 278,589
      YoY % growth     9.7%     8.8%     9.4%     15.9%   11.0%     20.5%     28.6%     34.2%
      QoQ % growth     -0.3%     5.8%     -0.9%     10.9%         3.7%     12.8%     3.4%
                                               
Stock-based Compensation (SBC)                                              
  SBC included in Gross Profit   $ 980   $ 970   $ 984   $ 1,008 $ 3,942   $ 961   $ 932   $ 995
  SBC included in Operating Expenses     10,670     11,860     13,677     12,799   49,006     11,563     12,767     12,716
    Total SBC Expense   $ 11,650   $ 12,830   $ 14,661   $ 13,807 $ 52,948   $ 12,524   $ 13,699   $ 13,711
                                               
 

Note: Historical public data may differ due to rounding. Additionally, rounding may effect totals.

   
ALIGN TECHNOLOGY, INC.  
BUSINESS OUTLOOK SUMMARY  
(unaudited)  
   
The outlook figures provided below and elsewhere in this press release are approximate in nature since Align's business outlook is difficult to predict. Align's future performance involves numerous risks and uncertainties and the company's results could differ materially from the outlook provided. Some of the factors that could affect Align's future financial performance and business outlook are set forth under "Forward-Looking Information" above in this press release.
   
Financial Outlook  
(in millions, except per share amounts and percentages)
   
  Q4'16 Guidance
   
  GAAP
   
Net Revenues $289.2 - $293.9
   
Gross Margin 74.7% - 75.1%
   
Operating Expenses $149.6 - $150.6
   
Operating Margin 23.0% - 23.9%
   
Net Income per Diluted Share $0.64 - $0.67
   
   
Business Metrics: Q4'16
   
Case Shipments 182.5K - 184.5K
Capital Expenditure $63M - $68M
Depreciation & Amortization $7.0M - $7.5M
Diluted Shares Outstanding 81.5M*
Stock Based Compensation Expense $14.7M
Tax Rate 22.0%
   
* Excludes any stock repurchases during the quarter